Labor drops proposal to split Telstra

Labor today ditched its proposal to split Telstra into two separate companies, saying new research showed it would be too expensive and too complicated.

Opposition communications spokesman Lindsay Tanner floated the structural separation of Telstra, splitting the company's network from its services arm, in a policy discussion paper last year.

But Mr Tanner said it would be too expensive and too complex to compensate existing Telstra shareholders, and the only other option was to legislate to remove their rights, which could lead to court battles.

"Pursuing that path seems to be too costly and too complex to be worthwhile," he said.

But Mr Tanner said Labor did want a clearer separation between Telstra's wholesale and retail operations, and a larger role for the Australian Competition and Consumer Commission in determining prices Telstra charged its competitors - and itself - for network access.
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He said Labor was also concerned about Telstra's market dominance stemming from its shareholding in pay TV service Foxtel and Foxtel's recent deal with Optus.

Mr Tanner also flagged a new consumer charter to crack down on hard selling of mobile phone contracts and phone companies' complaint handling.

He said credit limits should apply to phone bills to stop consumers running up huge debts, often without their knowledge.